We are long-term oriented, fundamental investors focused on identifying and investing in high-quality public companies that possess durable competitive advantages.
About Us
Founded in 2008, Elemental Capital Management, LLC is a registered investment adviser located in Glen Allen, Virginia.
Our ideal clients are engaged, thoughtful partners who believe in active portfolio management, and who are comfortable giving us discretion to manage their investments.
Of course, we recognize that we cannot be all things to all people, so we prefer to work with clients who have long-term investment time horizons; who prefer to delegate the portfolio management decisions to us; and who can tolerate staying invested throughout a full market cycle.
The foundation of our advice is a comprehensive analysis of each client’s unique financial circumstances. These personal details help us understand our clients’ goals, time horizon, and risk tolerance.
Investment Philosophy
First Principles
Our approach to equity investing is guided by three fundamental principles. First, we believe that businesses create wealth by generating a return on capital that exceeds their cost of capital. Second, we believe that the most important risk for investors to consider is the potential for a permanent loss of capital. And third, we believe that the most effective way to mitigate risk, and maximize returns, is to own a concentrated portfolio of high-quality businesses purchased at reasonable prices.
Ideal Investments
In our experience, there are relatively few companies that can consistently generate cash flows at high rates of return on capital over time, thereby creating long-term wealth for their shareholders. We have found that these exceptional businesses often possess unique competitive advantages that enable them to enjoy such enduring financial success. Ultimately, our focus is on discovering these rare enterprises, and our portfolios typically own a limited number of companies as a result.
Our search for high-quality businesses begins by utilizing fundamental analysis to identify companies that are 1) benefiting from unique competitive advantages, 2) led by talented and trustworthy management teams, 3) able to earn high cash returns on capital over time, and 4) selling below their intrinsic value.
Quality Focus
Before we invest in any business, we analyze the firm’s SEC filings and financial statements. But we also recognize that earnings and cash flows alone will not tell us everything we want to know about the company. To fully understand a business, we need to evaluate its culture, its consumer brand awareness, the management team’s tenure and compensation, sources of the firm’s competitive advantages, industry dynamics, and other qualitative characteristics. Many of these intangible qualities are not printed in a company’s financial statements, but they do exist, and they are valuable. Conducting a more holistic examination helps us to identify exceptional businesses that may be worthy long-term investments.
Long-Term Orientation
In the long run, successful investing is as much a product of time as it is of sound judgment. In good times and bad, staying invested requires patience and discipline - attributes that we have cultivated since our firm’s founding during the Great Recession in 2008. We believe that our experience, combined with our ownership mentality, has enabled us to take a focused, long-term view, and we think this gives our clients an advantage.
Contact Us
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